United States District Court, N.D. Illinois, Eastern Division
GABRIELA RAMIREZ, FIDELA AVINA, RUEL NIETO, KATHERINE RANOS, and EVALINA GONZALEZ, Plaintiffs,
MIDLAND FUNDING, LLC, MIDLAND CREDIT MANAGEMENT, INC., and ENCORE CAPITAL GROUP, INC., Defendants.
MEMORANDUM OPINION AND ORDER
L. ALONSO UNITED STATES DISTRICT JUDGE
plaintiffs received allegedly misleading collection letters
sent by defendant Midland Credit Management, LLC, they filed
a one-count purported class action complaint alleging three
defendants violated the Fair Debt Collection Practices Act
(“FDCPA”). Defendants have filed a motion to
compel arbitration. For the reasons set forth below, the
Court denies the motion to compel arbitration.
Gabriela Ramirez (“Ramirez”), Fidela Avina
(“Avina”), Ruel Nieto (“Nieto”),
Katherine Ranos (“Ranos”) and Evalina Gonzalez
(“Gonzalez”) are individuals who applied for and
used credit cards whose card agreements contained arbitration
provisions. Plaintiffs allege that they were unable to
pay their debts and that defendants violated the FDCPA in
attempting to collect the debts.
Ramirez and Katherine Ranos
opened a Citibank/Sears credit card in 1990. Ramirez opened a
Citibank/Sears credit card in 2011. Each was sent, with her
credit card, a copy of the Citibank/Sears card agreement.
Citibank card agreement contains a choice of law provision
which identifies South Dakota as the governing law. (Docket
59-1 at 29; Docket 59-6 at 29) (“Federal law and the
law of South Dakota, where we are located, govern the terms
of this Agreement.”). In addition, the Citibank card
agreement provides, among other things:
This card agreement is your contract with us.
You agree to use your account in accordance with this
Agreement. You must pay us for all amounts due on your
account. This Agreement is binding on you unless you close
your account within 30 days after receiving the card and you
have not used or authorized use of the card.
You or we may arbitrate any claim, dispute or
controversy between you and us arising out of or related to
your account, a previous related account or our relationship
If arbitration is chosen by any party, neither you
nor we will have the right to litigate that Claim in court or
have a jury trial on that Claim.
Except as stated below, all Claims are subject to
arbitration, no matter what legal theory they're based on
or what remedy (damages, or injunctive or declaratory relief)
they seek, including claims based on contract, tort
(including intentional tort), fraud, agency, your or our
negligence, statutory or regulatory provisions, or any other
sources of law; Claims made as counterclaims, cross-claims,
third-party claims, interpleaders or otherwise; Claims made
regarding past, present, or future conduct; and Claims made
independently or with other claims. This also includes Claims
made by or against anyone connected with us or you or
claiming through us or you, or by someone making a claim
through us or you, such as a co-applicant, authorized user,
employee, agent, representative or
Claims brought as part of a class action, private attorney
general or other representative action can be arbitrated only
on an individual basis.
(Docket 59-1 at 27-8; Docket 59-6 at 27-8) (emphasis in the
used the card. The last time she paid was November 18, 2015.
On June 30, 2016, Citibank charged off the account. Ramirez
also used her card. The last time she paid was November 26,
2015, and Citibank charged off the account in March 2016.
opened a Synchrony Bank/Old Navy card in January 2014. Avina
was sent, along with her card, a copy of the Synchrony/Old
Navy card agreement. She was later sent, with her billing
statement, an updated Synchrony/Old Navy card agreement. That
agreement includes a choice of law provision in favor of Utah
law. (Docket 59 at 6) (“Utah law shall apply to the
extent state law is relevant under the FAA.”). That
agreement also states, in relevant part:
This Agreement. This is an Agreement between
you and Synchrony Bank . . . By opening or using your
account, you agree to the terms of the entire Agreement.
RESOLVING A DISPUTE WITH ARBITRATION PLEASE READ THIS
SECTION CAREFULLY. IF YOU DO NOT REJECT IT, THIS SECTION WILL
APPLY TO YOUR ACCOUNT, AND MOST DISPUTES BETWEEN YOU AND U.S.
WILL BE SUBJECT TO INDIVIDUAL ARBITRATION.
What claims are subject to arbitration
1. If either you or we make a demand for arbitration, you and
we must arbitrate any dispute or claim between you or any
other user or your account, and us, our affiliates, agents
and/or The Gap, Inc. if it relates to your account, except as
*No class actions
YOU AGREE NOT TO PARTICIPATE IN A CLASS,
REPRESENTATIVE OR PRIVATE ATTORNEY GENERAL ACTION AGAINST
U.S. IN COURT OR ARBITRATION.
How to reject this section
reject this Arbitration section of your agreement. . . . To
reject this section, you must send us a notice within 60 days
after you open your account or we first provided you ...